Japan and US ready to intervene in FX markets again, says Katayama

In a recent interview, Japanese Finance Minister Satsuki Katayama stated that Japan and the US are prepared to intervene in foreign exchange markets once more, according to Reuters. Katayama explained that both nations acknowledged the yen's decline was largely due to speculative activity, rather than genuine demand, stemming from years of yen carry trades.

She emphasized that the two governments are ready to step in without reservation, and they intend to clearly explain how Japan's macroeconomic and microeconomic policies can strengthen the value of the yen. The dollar experienced a decline against several currencies, including the yen and euro, following the release of data showing a surprise drop in US employment in July.

This data indicated that the US economy shed 23,000 jobs in July, far below the anticipated increase of 80,000 jobs according to a Reuters poll. Additionally, the US unemployment rate dropped to 4.1%, resulting in the labor participation rate reaching a 5-1/2-year low of 61.4%. Following the report, the dollar weakened against the yen, reverting to gains achieved in recent days following a historic intervention between Japanese and US authorities. This intervention had driven the dollar to a 13-week low.